U.K. Stocks Advance as EU Pledges to Channel Funds Through IMF
U.K. stocks rose, paring a weekly decline, as European Union leaders pledged that national central banks will channel 200 billion euros ($268 billion) through the International Monetary Fund to fight the debt crisis.
Barclays Plc (BARC) and Lloyds Banking Group Plc (LLOY) climbed more than 5 percent. Bellway Plc (BWY) added 2.8 percent after the U.K. homebuilder that focuses on first-time buyers predicted that completed sales will increase.
The benchmark FTSE 100 (UKX) Index gained 45.44, or 0.8 percent, to 5,529.21 at the close in London, paring this week’s drop to 0.4 percent. The gauge has rebounded 12 percent from this year’s low on Oct. 4 amid mounting optimism that euro-area leaders will agree measures to end the debt crisis. The FTSE All-Share Index rose 0.9 percent today, while Ireland’s ISEQ Index added 0.8 percent.
“The 200 billion euros of additional funds from nations is positive,” said Virginie Maisonneuve, head of global equities at Schroder Investment Management Ltd., which oversees $284 billion. “You have companies that are plays on the global economy that will be doing well and that have been penalized extremely strongly.” She spoke in a Bloomberg Radio interview with Ken Prewitt.
The FTSE 100’s 6.3 percent slump this year has left the gauge trading at 9.3 times the estimated profits of its companies for 2012, compared with an average price-earnings ratio of 11.3 over the past five years, according to data compiled by Bloomberg. The gauge slid as the euro area’s debt crisis spread to the 17-nation currency’s larger economies.
National Central Banks
An EU accord issued this morning said that the euro area’s national central banks will lend 150 billion euros to the IMF’s general resources, while central banks from the non-euro members of the EU will contribute a further 50 billion euros.
German Chancellor Angela Merkel said the leaders of the euro area reached a deal to tighten budget controls. The leaders outlined a “fiscal compact” to prevent debt from building up in future and brought forward the start of the planned 500 billion-euro permanent rescue fund by a year.
Barclays, the U.K.’s second-largest bank by assets, rose 5.4 percent to 190.2 pence and Lloyds climbed 6.5 percent to 26.72 pence.
Bellway advanced 2.8 percent to 749 pence after saying its completed sales will increase by about 5 percent in the six months through January.
African Barrick Gold Plc (ABG) lost 2.1 percent to 509 pence after saying that fourth-quarter output will miss previous forecasts because of power cuts in Tanzania.
Paddy Power Plc (PAP) slid 2.5 percent to 40.62 euros in Dublin after Bank of America Corp. cut its recommendation on the stock to “underperform” and an Australian parliamentary committee recommended keeping a ban on live online gambling.
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